Projo 7 to 7 News Blog

PROVIDENCE -- Rhode Island's revenue collections through April are down approximately $100 million compared to projections made last fall, according to a monthly report released Tuesday.

The numbers may offer another sign that the state's economy is struggling to right itself.

State officials largely attribute the lag to a dip in April's income tax collections -- a direct result of the highest unemployment rate in three decades, the overall decline in wages and in some cases massive losses in capital gains.

With thousands of Rhode Islanders out of work, making less money or losing on investments, the state has collected less in taxes than projected.

Sales taxes too declined by almost $8 million, compared with estimates, according to the report.

"The analysis through April shows we are running behind, and that obviously is a source of concern," said Gary S. Sasse, director of the Rhode Island Department of Administration. "... there are going to be some very tough decisions that will have to be made over the next two months in order to balance the budget," before the fiscal year ends June 30.

A separate report released Tuesday by the House suggested a slightly less precipitous dip, at $98 million less than forecast last fall. But the message was equally clear.

"Personal income tax withholding payments and sales tax collections are fairly reliable indicators of economic activity since they are collected monthly," House Fiscal Advisor Michael O'Keefe wrote in his report. "Both are increasingly behind the estimates."

Rhode Island is hardly alone. Massachusetts this week reported that its income taxes were off by $953 million from the same month last year. Other states have projected similar declines.

The state's budget writers say the dip is not entirely unexpected. For months, Smith Hill lawmakers have been doing what they can to prepare for the slide.

"It's bad, but it's also what I predicted," said House Finance Chairman Steven M. Costantino. "It's why what came out of House Finance [in the mid-year budget rewrite] was so important. My theory was to wait, not to spend money we didn't have, wait until the conference, then make those decisions. Now you are faced with an additional $98 million."

Last month, lawmakers made millions in cuts to the state's $7.2-billion current-year spending plan to plug a $357-million deficit.

And the worst may be yet to come. Later this week, Rhode Island's official budget estimators will gather to forecast the state's revenue figures for the coming year in the semi annual Revenue Estimating Conference.

 Tags  General Assembly politics

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